Monday, October 25, 2010

Inferno Continues

It still seems to be alight

BOM correspondents have spotted the following ongoing money pyres:

1. British Council

The good old £0.5bn pa British Council escaped the quango cull (see this blog), and carries on torching our cash as if nothing has happened. David Blackie reports that they have just spent an unknown amount on the “style.uz” fashion week in Tashkent. As David comments:

"If the British Council sponsors a “fashion show” anywhere you might wonder whether in this age of austerity it was an appropriate use of taxpayers money. If the organisation sponsors a fashion show to demonstrate support for such a deeply oppressive regime, you know bloody well that it should do no such thing."

As regular BOM readers will know, when companies like BT were privatised back in the 80s, it wasn't done cleanly - HMG issued a Crown Guarantee covering the companies' accrued pension liabilities. In effect, the problem was kicked off into the long grass by ministers and civil servants who have long since retired on their own index-linked pensions. Unfortunately, what with everyone now living to 120, and the dismal performance of the stock market, those guarantees are coming home to roost big time.

The High Court has now ruled in favour of the BT pension fund trustees, saying that taxpayers are on the line for liabilities of up to £23bn. And that opens the door for a slew of other pension funds to make the same claim. Industry insiders reckon Railway Pensions, UK Coal and Trinity House, would all have strong cases. But British Gas and National Grid could also be included.

The final bill could be... what shall we say... £50 - 100bn? All because privatisation was cocked up.

3. BBC

Long-time BOM correspondent Keith M points out that the much-bewailed cut to the BBC's funding may be more apparent than real.

Yes, the BBC has lost its funding for the World Service, but if they look well about them they could recoup that - and quite possibly a great deal more - by opening the World Service to adverts.

He also points out that although the BBC is being made responsible for funding rural broadband and SC4, a large chunk of those costs are already being carried within the existing arrangements. For example, £804m (c£134m pa) in the last settlement was earmarked for supposed digital switchover costs. And now that most people have switched, that cash is effectively available to fund the BBC's new responsibilities.

Finally, he reminds us that a 6 year freeze in the licence fee is not the same thing as a revenue freeze. The BBC will still benefit from the growth in the number of licence holders.

Roll on privatisation.

Conclusion...

What all three of these pyres highlight is that even after George's cuts, the incineration problem has most certainly not gone away.

But on the positive side, when the BBC keeps asking "what's your Plan B?", it's clear that there's still plenty of scope to cut spending further. And that includes spending on the BBC.

BOM the book now available

Drawing on six years of blogging government waste, this book shows how we spend far more than we need on our public services. It sets out the facts and explores the underlying issues. Just why does government spend so much and deliver such second rate service? Why do we put up with it? And what are the alternatives?

ABOUT BOM

Despite all the talk of cuts, government still consumes nearly half our national income. Yet many tens of billions of its spending is wasted, with taxpayers made to pick up the tab for a depressing array of overpriced sub-standard services. This is money we can no longer afford, and our National Debt is already at danger level.

If we're to avoid further decades of stagnation and austerity we urgently need to find another way. Exposing and understanding the wastefulness of government is a necessary step in the right direction.